27-14-201. Rates and classifications; rate surcharge.

(a) The worker's compensation program shall be neither more nor less than self-supporting. Employments affected by this act shall be divided by the division into classes, whose rates may be readjusted annually as the division actuarially determines. Any employer may contest his classification as determined by the division following the contested case provisions of the Wyoming Administrative Procedure Act except that the division shall carry the burden of proving that the classification is correct. Information shall be kept of the amounts collected and expended in each class for actuarially determining rates, but for payment of compensation, the worker's compensation account shall be one and indivisible.

(b) If it is determined at any time and in any manner that a determination by the division of an industrial or employment classification is incorrect, premiums under any corrected classification shall be charged only from the date of change in classification. This subsection shall not apply to any employer's categorization of an employee's gross earnings to an industrial or employment classification.

(c) Upon compliance with the rate making provisions of the Wyoming Administrative Procedure Act and written approval by the governor, the division shall determine the hazards of the different classes of employments and fix the premiums therefor at the lowest rate consistent with maintenance of an actuarially sound worker's compensation account and the creation of actuarially sound surplus and reserves, and for such purpose shall adopt a system of rating in such a manner as to take account of the peculiar hazard of each risk, mathematically and equally based on actual costs to the program in terms of number and extent of injuries and deaths, and shall use consultants or rating organizations as it determines necessary. The department shall submit an annual report with respect to proposed annual rate adjustments under this section to the joint labor, health and social services interim committee no later than October 1 of the year preceding the implementation of the rate adjustment. The total annual rate adjustment for any employment classification under this section is subject to the following limitations:

(i) Repealed by Laws 1994, ch. 86, § 3.

(ii) Repealed by Laws 1994, ch. 86, § 3.

(iii) Repealed By Laws 1998, ch. 117, § 2.

(iv) Repealed By Laws 1998, ch. 117, § 2.

(v) For the calendar year commencing January 1, 1999 and each calendar year thereafter, any increase in the base rate for each employment classification shall not exceed fifty percent (50%) of the base rate imposed for that employment classification during the immediately preceding year;

(vi) To compensate for the difference between revenues generated under base rate adjustment limitations imposed under paragraph (c)(v) of this section and revenues which would have been generated if base rates had been adjusted without limitations, the division may limit base rate decreases for any employment classification by not more than fifty percent (50%) of the actuarially determined decrease;

(vii) Repealed By Laws 1998, ch. 117, § 2.

(viii) In determining rates under this section for employers specified under W.S. 27-14-108(a)(ii)(G)(I), the division shall base the rates on one (1) rate classification for sales personnel and one (1) rate classification for all other personnel other than clerical;

(ix) Notwithstanding paragraph (v) of this subsection, for the calendar year beginning January 1, 2003, rates shall be adjusted to reflect the reclassification of industry codes in accordance with the North American Industry Classification System (NAICS) manual, but in no case shall the base premium rate for any classification for the calendar year beginning January 1, 2003 exceed one hundred fifty percent (150%) of the lowest base rate assigned to any employer in that classification under the standard industrial classification manual for the preceding year.

(d) In addition, the plan of rating shall use an experience rating system based on three (3) years claim experience, or as much thereof as is available, for employers enrolled under it. This system shall reward employers with a better than average claim experience, penalize employers with a worse than average claim experience and may provide for premium volume discount so long as the account remains actuarially sound. Discounts from or penalties added to base employment classification rates because of claim experience shall not exceed sixty-five percent (65%) for rates through calendar year 2016 and shall not exceed eighty-five percent (85%) for rates beginning with calendar year 2017. An employer who is current on premium payments required by this act may apply to the division for a determination of experience modification rating chargeability for an injury to the employer's employee. The division's determination of chargeability shall be reviewable as provided in W.S. 27-14-601(k)(iii) and (iv). If the division, by a preponderance of the evidence, determines that an employee's injury was primarily caused by a third party, the injury shall not be charged to the employer's account. The employer shall bear the burden of proof in any action brought by the employer for a chargeability determination. If an employer's account is determined to be unchargeable under this subsection, the employer's account shall not be further credited upon recovery from a third party by the division. The division shall by rule and regulation establish necessary procedures for a determination of chargeability. Any determination by the division regarding causation of an injury pursuant to this subsection shall be used only for ratemaking purposes and shall not be admissible in any civil litigation regarding the injury.

(e) The division in fixing rates shall provide for the costs of benefits and the expenses of administering the worker's compensation account allowed by law, subject to the following:

(i) The account shall be one (1) account but shall include provision for all expenses allowed by this act, loss adjustment expenses and unpaid losses, including:

(A) Case reserves;

(B) Future development on known claims;

(C) Reopened claims reserve;

(D) Claims incurred but not reported;

(E) Claims incurred and reported but not yet recorded;

(F) An actuarially reasonable contingency margin to reflect the uncertainty inherent in estimates of unpaid losses and loss adjustment expenses.

(ii) The account shall be fully reserved on or before December 31, 2013;

(iii) The division shall annually obtain a report from a qualified actuary rendering an opinion regarding the reasonableness of the booked loss and loss adjustment expense reserve and carried contingency reserve;

(iv) The division shall provide the opinion required by paragraph (iii) of this subsection to the joint labor, health and social services interim committee, or its successor, by November 1 of each year;

(v) For purposes of calculating reserves, future liabilities shall be discounted to present value using a discount factor selected by the division. The discount factor selected by the division and the reason for its selection shall be included in the annual report to the joint labor, health and social services interim committee or its successor;

(vi) The collection through premiums of any deficiency in reserves and surpluses that exceeds five percent (5%) of the fund balance shall be averaged over a ten (10) year period;

(vii) For purposes of this section:

(A) "Fully reserved" means that the workers' compensation account established by W.S. 27-14-701 has, in the opinion of a qualified actuary, funds sufficient on a discounted basis to provide for all unpaid loss and loss adjustment expenses as well as an actuarially appropriate provision for adverse contingencies;

(B) "Qualified actuary" means a person who is a fellow of the Casualty Actuarial Society or who has been approved as qualified for signing casualty loss reserve opinions by the Casualty Practice Council of the American Academy of Actuaries.

(f) The division is given full power and authority to annually determine premium rates and classifications according to the standards set forth under subsections (b), (c) and (d) of this section provided that no change in the classification or rates prescribed shall be effective until thirty (30) days after the date of the order making the change.

(g) Policies or statements of coverage may be issued to each covered employer. The division shall collect all costs in certifying coverage under this act from the person requesting the certification except for one (1) policy or statement of coverage which may be issued to the employer at no charge.

(h) Approximate rates applicable to each employer pursuant to this section shall be annually provided to the employer by October 1.

(j) All data and formulas used by the division, including the employment classification base rate and claim experience rating, to determine rates for an employer shall be made available to the employer upon request of the employer.

(k) Repealed by Laws 1989, ch. 149, § 3, 1994, ch. 86, § 3.

(m) Repealed by Laws 1987, ch. 94, § 2.

(n) Repealed By Laws 1998, ch. 117, § 2.

(o) The division shall in accordance with its rules and regulations, grant a discount to rates established under this section in an amount not to exceed ten percent (10%) of the base rate for the employment classification of any employer if the employer complies with a safety program approved by the division and a discount in an amount not to exceed ten percent (10%) of the base rate for the employment classification if the employer complies with a drug and alcohol testing program approved by the division and a discount in an amount not to exceed ten percent (10%) of the base rate for the employment classification if the employer complies with a health and safety consultation program developed by the department of workforce services in consultation with the occupational health and safety commission. In no instance shall the sum total of discounts under this subsection exceed thirty percent (30%) of the base rate for the employment classification for the employer. The discount for the health and safety consultation program shall only remain in effect for three (3) years after the employer is certified to be in compliance with the health and safety consultation program recommendations. In determining safety program approval, drug and alcohol program approval, health and safety consultation program approval and the total discount granted under this subsection, the division shall consider:

(i) The probability the program will reduce the number of accidents and the probable savings which may be realized from the reduction;

(ii) Relevant experience, if any, depicting actual reduction in accidents and actual savings which is compared to an industry standard;

(iii) The adequacy and accuracy of determining participation in the program and the eligibility for a discount by individual employers;

(iv) The administrative costs incurred by the division in implementing a rate discount for an applicable employment classification;

(v) Whether the employer adopts and enforces policies establishing a drug-free workplace which may include an employee assistance program to assist employees with alcohol or other drug problems. The division shall follow rules adopted by the department of workforce services in consultation with the department of health for the effective implementation of this paragraph. Rules adopted pursuant to this paragraph shall not impose on any employer the requirement to pay the costs of treatment or any other intervention. Employers enrolled in a safety discount program under this paragraph shall have one (1) year from the effective date of those rules within which to come into compliance.

(p) Repealed By Laws 1998, ch. 117, § 2.

(q) The division may, in accordance with its rules and regulations, grant a premium credit to rates established under this section if it is determined by a qualified actuary retained by the division that the fund will remain fully reserved after the premium credit is granted and implemented. If the division determines to grant a premium credit, the percentage of credit allowed for the rate year shall be the same for all employers qualified pursuant to paragraph (iii) of this subsection. The following provisions shall also apply to the premium credit program:

(i) The premium credit to an employer may be applied only against premiums due in the year in which the credit was issued. The premium credit can only be used to offset premiums, and in no case can the premium be redeemed by an employer for cash;

(ii) Any premium credits unclaimed at the end of the year shall expire;

(iii) The premium credit, if granted, shall only be given to those employers who paid premiums during the preceding year and whose accounts are current on all amounts owed under the act, including premiums, case cost liability and penalties.

(r) In an industrial classification with less than twelve (12) employers in which a single employer contributes greater than fifty percent (50%) of the total premium in that classification, the director of the department of workforce services, with the concurrence of the governor, may adjust the base rate for the employer established pursuant to this section, not to exceed twenty-five percent (25%) subject to the following:

(i) An affected employer submits a written application to the division in the format prescribed by the division after October 1 and before December 31 of the year preceding the year in which the adjustment will be made;

(ii) The affected employer's experience modification rating is lower than the average for the employer's industrial classification;

(iii) The director determines that the employer has been adversely affected due to the distribution of premiums within the industrial classification; and

(iv) The employer is contributing less than twenty-five percent (25%) of the total premium of the industrial classification.

(s) Any loss of premium due to an adjustment pursuant to subsection (r) of this section shall be distributed among all rate classes in the annual base rate adjustment in the year subsequent to the year in which the adjustment was made.

(t) The division may, in accordance with its rules and regulations, create and implement a premium deductible program. The following provisions shall apply to the premium deductible program:

(i) Participating employers shall sign a contract with the division, clearly identifying the terms of the program;

(ii) Participating employers shall be assigned a reduced industry base rate for premium calculation purposes. The industry base rate reduction shall be determined in a manner that reflects the dollar amount of the deductible and is consistent with an actuarially sound workers compensation account;

(iii) Participating employers shall be financially stable and in good standing with the division;

(iv) Participating employers shall report all work injuries within the timeframes specified in W.S. 27-14-506;

(v) Participating employers failing to meet the requirements of the premium deductible program shall have their premium base rate reinstated at the full industry base rate, retroactive to the reporting period in which the employer first became noncompliant. Employers whose premium base rate is reinstated at the full industry base rate under this paragraph shall not be re-eligible for the premium deductible program for a minimum of eight (8) calendar quarters;

(vi) Participation in the premium deductible program cannot be transferred to a successor employer nor can it be incorporated as part of a merger among employing units.